Econometrics Study Test Questions
and Answers
A researcher plans to study the causal effect of police crime using data from a random
sample of U.S. counties. He plans to regress the county's crime rate on the (per capita)
size of the country's police force. Which of the following variable(s) is/are likely NOT to
be useful to add to the regression to control for important omitted variables?
The average level of education in the county.
The number of bowling alleys in the county.
The fraction of young males in the county population
The average income per capita of the county. - Answer- b
The estimated effect of gender gap is statistically significant at the:
I. 5% level
II. 1% level
III. 0.01% level - Answer- I,II,III
A binary variable is often called a: - Answer- dummy variable
The t-statistic is calculated by dividing: - Answer- the estimator minus its hypothesized
value by the standard error of the estimator.
Consider the regression model
Wage = β0 + β1Female + u
Where Female (=1 if female) is an indicator variable and u the error term.
Identify the dependent and independent variables in the regression model above.
Wage is the __________ variable - Answer- dependent
Using the textbook example of 420 California school districts and the regression of test
scores on the studentteacher ratio, you find that the standard error on the slope
coefficient is 0.51 when using the heteroskedasticityrobust formula, while it is 0.48 when
employing the homoskedasticityonly formula. When calculating the t statistic, the
recommended procedure is to:
A.
use the homoskedasticityonly formula because the t statistic becomes larger.
, B.
first test for homoskedasticity of the errors and then make a decision.
C.
make a decision depending on how much different the estimate of the slope is under the
two procedures.
D.
use the heteroskedasticity-robust formula. - Answer- D
Suppose you are interested in investigating the wage gender gap using data on
earnings of men and women. Which of the following models best serves this purpose?
A.
Female = β0 + β1Wage + u where Female (=1 if female) is an indicator variable and u
the error term.
B.
Wage = β0 + β1 Female + u where Female (=1 if female) is an indicator variable and u
the
error term.
C.
Wage = β0 + u where u is the error term.
D.
Male = β0 + β1Female + u where Male (=1 if male) is an indicator variable and u the
error term - Answer- B
The 95% confidence interval for β1 is the interval:
A.
β1 - 1.645SE β1 , β1 + 1.645SE β1 .
B.
(β1 - 1.96SE(β1), β1 + 1.96SE(β1))
C.
β1 - 1.96SE β1 , β1 + 1.96SE β1
D.
β1 - 1.96, β1 + 1.96 - Answer- C
and Answers
A researcher plans to study the causal effect of police crime using data from a random
sample of U.S. counties. He plans to regress the county's crime rate on the (per capita)
size of the country's police force. Which of the following variable(s) is/are likely NOT to
be useful to add to the regression to control for important omitted variables?
The average level of education in the county.
The number of bowling alleys in the county.
The fraction of young males in the county population
The average income per capita of the county. - Answer- b
The estimated effect of gender gap is statistically significant at the:
I. 5% level
II. 1% level
III. 0.01% level - Answer- I,II,III
A binary variable is often called a: - Answer- dummy variable
The t-statistic is calculated by dividing: - Answer- the estimator minus its hypothesized
value by the standard error of the estimator.
Consider the regression model
Wage = β0 + β1Female + u
Where Female (=1 if female) is an indicator variable and u the error term.
Identify the dependent and independent variables in the regression model above.
Wage is the __________ variable - Answer- dependent
Using the textbook example of 420 California school districts and the regression of test
scores on the studentteacher ratio, you find that the standard error on the slope
coefficient is 0.51 when using the heteroskedasticityrobust formula, while it is 0.48 when
employing the homoskedasticityonly formula. When calculating the t statistic, the
recommended procedure is to:
A.
use the homoskedasticityonly formula because the t statistic becomes larger.
, B.
first test for homoskedasticity of the errors and then make a decision.
C.
make a decision depending on how much different the estimate of the slope is under the
two procedures.
D.
use the heteroskedasticity-robust formula. - Answer- D
Suppose you are interested in investigating the wage gender gap using data on
earnings of men and women. Which of the following models best serves this purpose?
A.
Female = β0 + β1Wage + u where Female (=1 if female) is an indicator variable and u
the error term.
B.
Wage = β0 + β1 Female + u where Female (=1 if female) is an indicator variable and u
the
error term.
C.
Wage = β0 + u where u is the error term.
D.
Male = β0 + β1Female + u where Male (=1 if male) is an indicator variable and u the
error term - Answer- B
The 95% confidence interval for β1 is the interval:
A.
β1 - 1.645SE β1 , β1 + 1.645SE β1 .
B.
(β1 - 1.96SE(β1), β1 + 1.96SE(β1))
C.
β1 - 1.96SE β1 , β1 + 1.96SE β1
D.
β1 - 1.96, β1 + 1.96 - Answer- C
